HONG KONG: Asian equities nosedived Thursday while the dollar suffered fresh selling on fears the intensifying crisis surrounding Donald Trump could lead to his impeachment and shatter any chances of his economy-boosting agenda being implemented.
Investors tracked the heaviest losses in New York since Trump was elected, following claims by recently fired FBI boss James Comey that the president pressed him to drop a probe into ex-national security advisor Michael Flynn's links to Moscow.
That came a day after it was reported Trump had divulged classified information to Russia's foreign minister, fanning further allegations about his own tied to the country's leaders.
While the tycoon says he will be exonerated by a newly appointed special prosecutor who will look into the claims, analysts said the uncertainty is rocking markets globally.
There is a growing fear that Trump's plans for tax cuts, big spending and red-tape slashing -- which had fuelled a global equities and dollar rally his November election win -- will be thrown off course.
"It's all about president Trump this morning," said Greg McKenna, chief market strategist at AxiTrader, said in a note.
"Impeaching Donald Trump was a pipe dream for the Democrats but extremely unlikely to most other observers until a few days ago," he added. "As it drags on, it hurts sentiment and recently often threatens the administration's agenda - especially around tax and infrastructure."
- Fears of collapse -
By the break Tokyo had plunged 1.4 percent, while Hong Kong shed 0.4 percent, Sydney dived 1.3 percent, Seoul was 0.5 percent off and Singapore gave up 0.4 percent. Shanghai lost 0.2 percent, Wellington 0.7 percent and Taipei 0.6 percent.
There were also heavy losses in Manila and Jakarta.
"There is a very high level of uncertainty oozing from the markets but one thing that is crystal clear, investors now believe that at a minimum the rising US political entropy will jeopardise the White House policy agenda, and at the extreme, a Trump impeachment will lead to a flat out market collapse," said OANDA senior trader Stephen Innes.
The uncertainty fanned a flight to safe assets, sending the yen and gold rallying, while the VIX gauge of volatility -- also known as the fear index -- soared 50 percent.
The dollar tumbled as dealers began to reconsider the chances of a Federal Reserve interest rate hike next month, which had been widely expected.
In Asian trade the greenback sank below 111 yen for the first time since the end of April, while the euro -- itself buoyed by easing uncertainty in the EU and a pick-up in eurozone economic fortunes -- continued to levels not seen since Trump's election win.
- Key figures around 0230 GMT -
Tokyo - Nikkei 225: DOWN 1.4 percent at 19,529.70 (break)
Hong Kong - Hang Seng: DOWN 0.4 percent at 25,188.09
Shanghai - Composite: DOWN 0.2 percent at 3,097.50
Euro/dollar: UP at $1.1166 from $1.1157 at 2100 GMT
Dollar/yen: DOWN at 110.92 yen from 111.96 yen
Pound/dollar: UP at $1.2970 from $1.2967
Oil - West Texas Intermediate: DOWN 19 cents at $48.88 per barrel
Oil - Brent North Sea: DOWN 21 cents at $52.00 per barrel
New York - Dow: DOWN 1.8 percent at 20,606.93 (close)
London - FTSE 100: DOWN 0.3 percent at 7,503.47 (close)